The problem with economic corrections is the tendency of the government--who has to be seen doing SOMETHING--to drop an elephant on the high side of the teeter totter.

The real estate situation has to slowly rebalance itself. Below is an informal graph of housing prices in constant dollars from sometime around the end of 2006. It is similar to many graphs I've seen.

It doesn't take a genius to see that this commodity had entered the "tulip bulb" zone, and there would be a reckoning.

When I refinanced last year, I took some cash out, but I left a LOT of equity room, refusing to take the amount they wanted to give me. The equity financer actually assigned my home a ridiculous value almost a quarter of a million more than I believe I could get for the house if I put if up for sale at the time. How many others just dove right into something like that?

So I'm sitting pretty good. But you can see that the housing market has a ways to go to settle down to a reasonable level.

Speaking of elephants, there are idiots in the government trying to make mortgage money EASIER to come by, and raise the amount of backing the government provides to loans. Loosening the money even more is not what this market needs right now.

I suspect a lot of the problems we have now stem from well-meaning government mandates that, over the years, put houses and loans in the hands of lots of people who weren't really ready to pay for them.